According to an article posted by Bankrate.com, economists forecast that we have a 64% chance of entering a recession in 2023 (Foster, 2023). What does this mean for nurses and Americans in general? If you are like me, you have never lived through a recession and are interested in how this could impact your livelihood. Another point of concern is how is it possible to survive and daresay thrive throughout one? In order to answer these questions we will start with establishing an understanding of what exactly is a recession? Keep reading to learn more.
What is a recession?
A recession is a period of economic downturn, characterized by high unemployment, low consumer spending, and reduced business activity. Recessions can have significant effects on individuals and the economy as a whole, making it important to be prepared and have a plan for surviving and thriving during tough economic times. Now that we have a general idea of what a recession is, let’s explore some things we can do to prepare for the possible ramifications of if one actually came into effect?
How can I prepare for a recession?
Create an Emergency Fund
One of the key steps in preparing for a recession is creating an emergency fund. An emergency fund is a savings account specifically set aside for unexpected expenses or income disruptions, such as job loss or medical bills. Having an emergency fund can provide financial stability and security during a recession, allowing you to cover essential expenses and avoid going into debt. If you are interested in how to get started saving for your own 3 month emergency fund, read about how to do this step by step here or click the button below.
Reduce Expenses & Increase Savings
Another important step in preparing for a recession is reducing expenses and increasing savings. During a recession, it’s important to cut unnecessary spending and find ways to save more money. This can help to increase your financial flexibility and reduce the impact of potential income disruptions. One example of reducing expenses is by writing down all of your monthly streaming services and possibly canceling one or two that you don’t really watch anymore. We have all been there and subscribed for a 7 day free trial to watch a movie or show, and then never got around to canceling it before it charged and now it’s several months later and you forgot you even signed up. Is there a gym membership or Peloton subscription you honestly rarely use? These monthly charges can add up overtime so it can be beneficial to at least know where your money is going each month.
Manage and Pay Off Debt
In addition to building an emergency fund and reducing expenses, it’s important to be strategic with your debt during a recession. High levels of debt can make you vulnerable to financial difficulties during an economic downturn. By consolidating and refinancing your debt, paying off high-interest debt first, and avoiding taking on new debt, you can improve your financial stability and increase your ability to weather a recession. One method of paying down debt is called the “Avalanche Method.” You can read about how to pay down debt efficiently using the Avalanche Method by clicking here or click the button below.
In nursing we know there are a few times of the year when the hospital is busier than others, such as Flu season. During these times, the hospital is short staffed more when patient admissions are on the rise. Take advantage of opportunities to make money by picking up extra shifts that can help you throw money toward either your high interest debt or even in building your emergency fund. Joining committees at work might open up opportunities for more extra hours reserved for special meetings and to work on projects that might improve morale on the nursing floor where you work.
Protect Your Career and Income
During a recession, job loss and income reductions can be common, making it important to protect your career and income. One way to do this is by staying up-to-date on industry developments and trends, and continually developing your skills and expertise. This can make you more valuable and attractive to potential employers, and increase your chances of retaining your job or finding a new one in the event of a layoff. As a nurse, this could look like maintaining your necessary professional certifications and licensures in a timely manner. Make sure your BLS, ACLS, PALS, TNCC and any other certifications are up to date and keep track of when your nursing license is up for renewal and any continuing education units (CEUs) you may need to complete to qualify for an upcoming renewal.
Building a professional network can also be valuable during a recession. By establishing relationships with other professionals in your industry, you can create opportunities for networking, collaboration, and job leads. Additionally, networking can provide support, advice, and guidance during tough economic times. You can accomplish this by keeping in touch with old colleagues via phone or social media. You can also create or update and become more active on your old LinkedIn profile.
Diversify Your Investments
During a recession, market volatility can increase, making it important to diversify your investments. Diversification is the practice of spreading your investments across a variety of different assets, such as stocks, bonds, and real estate. This can help to mitigate risk and maximize returns, even during times of market volatility.
To create a well-diversified portfolio, it’s important to consider your own financial goals and risk tolerance. For example, if you are a younger investor with a long time horizon, you may be able to take on more risk and invest a larger portion of your portfolio in stocks. If you are closer to retirement and have a lower risk tolerance, you may want to allocate more of your portfolio to less volatile investments, such as bonds. Make sure you do your research before making any big moves with your investments or speak with a trusted financial advisor or mentor to help you determine the best way for you to diversify your investments during a recession.
Seek Expert Consult
If you don’t have the time to dedicate to performing proper due diligence about your financial situation, it could be to your benefit to get in touch with a financial advisor. Many reputable financial institutions offer various services that can help guide you on your financial journey. Nurses would not recommend for non-medical professionals to rely on a web search to diagnose and treat their complex medical conditions. So why would we make complex financial decisions based on a simple web search instead of seeking out an expert opinion regarding an area we might not necessarily have had the time or energy to have studied?
It’s important to regularly review and rebalance your portfolio to ensure that it remains diversified and aligned with your financial goals. This may involve selling some investments and buying others to maintain the desired balance of assets in your portfolio. Again, financial institutions like Vanguard, Fidelity, and others offer many services and resources that could assist you along the way.
Conclusion
In conclusion, a recession can have significant effects on individuals and the economy, making it important to be prepared and have a plan for surviving and thriving during tough economic times. The key steps for surviving a recession include creating an emergency fund, reducing expenses and increasing savings, being strategic with debt, protecting your career and income, diversifying your investments, and seeking out expert opinion if necessary. By implementing these steps and being prepared for potential economic challenges, you can maintain financial stability and still achieve your financial goals during a recession.
References:
Foster, S. (n.d.). Survey: Recession Odds For U.S. Economy In 2023 Hit 64%. Bankrate. Retrieved January 22, 2023, from https://www.bankrate.com/banking/federal-reserve/economic-indicator-survey-recession-risks-january-2023/
